At the end of last year the Takeovers Panel issued a further discussion paper addressing issues with compliance with the Takeovers Code arising from hostile takeovers. Submissions on the paper closed on 10 February 2011.

The paper discusses the problem that rule 25(1) of the Code, which regulates the conditions that the offeror may include in an offer, is out-of-balance with rule 38, which relates to defensive tactics engaged in by the target company to frustrate a takeover offer or to deny the shareholders an opportunity to consider the merits of a takeover offer. This issue was also the subject of a June 2010 discussion paper, which saw a divergence of opinions expressed by submitters on the Takeovers Panel's preferred option for addressing the issue. In this paper the Panel has put forward a revised preferred option for resolving the problem which more closely aligns the New Zealand regime with that in Australia, so far as it relates to defeating conditions in an offer.

The paper also discusses the problem encountered by target companies in resolving disputes with offerors over the reimbursement of the target company's expenses incurred in relation to a takeover offer. Amendments to the Takeovers Act 1993 are proposed to provide the Panel with the jurisdiction to determine disputes over the reimbursement of a target company for its takeover expenses.

Click here to access a copy of Bell Gully's submissions on this paper.